As a summer jam packed with non-traditional economic and geopolitical
news rapidly comes to a close, one of the more noteworthy events has
been the precipitous rise of U.S. Treasury (UST) note yields. Indeed, yields
on benchmark 2- and 10-year USTs rose to their highest levels since 2007,
both up 46 basis points since the end of May. While rising market yields for
longer-dated USTs during the early stages of any FOMC tightening cycle
are commonplace, what makes this latest leg up unique is that it has
occurred during the late stages of the most aggressive monetary policy
tightening in 40 years and, more importantly, during a sustained period of
moderating inflationary expectations.
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